ITO (IT) 4(1), MUMBAI v. SWAPNA PHOTOGRAPHER, MUMBAI

ITA 6484/MUM/2010 | 2007-2008
Pronouncement Date: 30-07-2012 | Result: Dismissed

Appeal Details

RSA Number 648419914 RSA 2010
Assessee PAN ANXPP6378G
Bench Mumbai
Appeal Number ITA 6484/MUM/2010
Duration Of Justice 1 year(s) 10 month(s) 27 day(s)
Appellant ITO (IT) 4(1), MUMBAI
Respondent SWAPNA PHOTOGRAPHER, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-07-2012
Appeal Filed By Department
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 30-07-2012
Date Of Final Hearing 30-07-2012
Next Hearing Date 30-07-2012
Assessment Year 2007-2008
Appeal Filed On 03-09-2010
Judgment Text
ITA NO.6484 OF 2010 MS SWAPNA PHOTOGRAPHER MUMBAI E BENCH PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL 'E' BENCH MUMBAI BEFORE SHRI B.R. MITTAL JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER ITA NO.6484/MUM/2010 (ASSESSMENT YEAR: 2007-08) INCOME TAX OFFICER (INTERNATIONAL TAXATION)-4(1) 1 ST FLOOR SCINDIA HOUSE BALLARD ESTATE MUMBAI (APPELLANT) VS. MS. SWAPNA PHOTOGRAPHER 801-813 MAHALAXMI CHAMBERS 22 BHULABAI DESAI MARG MAHALAXMI MUMBAI 400026 PAN NO.ANXPP 6378 G (RESPONDENT) DEPARTMENT BY: SHRI V. KRISHNAMOORTHY DR ASSESSEE BY: NONE DATE OF HEARING: 30/07/2012 DATE OF PRONOUNCEMENT: 30/07/2012 O R D E R PER B. RAMAKOTAIAH A.M. THIS IS A REVENUE APPEAL AGAINST THE ORDER OF THE C IT (A)-11 MUMBAI DATED 30.06.2010. THE REVENUE HAS RAISED TH E FOLLOWING GROUND: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LEARNED CIT (A) HAS ERRED IN HOLDIN G THAT THE BASE YEAR FOR DETERMINING THE INDEXED COST OF ACQUISITION SHOULD BE F.Y 1981-82 AS AGAINST F.Y 20 04- 05 DETERMINED BY AO. 2. BRIEFLY STATED AO NOTED THAT ASSESSEE IS NRI STAYI NG IN CANADA. DURING F.Y 2006-07 SHE HAS SHOWN INCOME FR OM OTHER SOURCES OF ` 3 38 764/-. VIDE AGREEMENT DATED 20.04.2006 ASSESS EE HAD SOLD FLAT NO.18A (ADMEASURING 1490 SQ.FT CARPET AREA) JALADARSHAN 51 L. JAGMOHANDAS MARG MUMBAI 400036 FOR ` 2.79 CRORES TO SHRI AJAY C. HATTANGADI AND MRS. ANURADHA AJAY HATTANGADI. THIS FLAT WAS ORIGINALLY PURCHASED ON 1 0.07.1967 BY FATHER OF ASSESSEE SHRI HIRAJI M. BOATWALA. CONSEQU ENT UPON HIS DEATH THE FLAT WAS TRANSFERRED IN THE NAME OF HIS SPOUSE MRS. EARNAWAZ BAOTWALA (I.E. MOTHER OF ASSESSEE). MRS. E ARNAWAZ EXPIRED ITA NO.6484 OF 2010 MS SWAPNA PHOTOGRAPHER MUMBAI E BENCH PAGE 2 OF 4 ON 01-02-2005 AND THE FLAT WAS EQUALLY DEVOLVED UPO N ASSESSEE AND HER SIBLINGS PERSIS UNDERSTANDING DRAWN UP BETWEEN THE FAMILY MEMBERS. AS PER THE VALUATION REPORT DATED 26.07.20 06 OF SHRI DR. ROSHAN A. NAMAVATI THE MARKET VALUE OF THE FLAT AS ON 01-04-1981 WAS ` .14 78 700/-. WHILE COMPUTING THE LONG TERM CAPITAL GAIN ON SALE OF INHERITED PROPERTY ASSESSEE HAS TAKEN A MA RKET VALUE AS ON 01-04-1981. HOWEVER WHILE COMPUTING THE INDEXED CO ST OF ACQUISITION SHE HAS TAKEN COST INFLATION INDEX OF F.Y 1981-82 AS BASE. SHE HAS COMPUTED HER SHARE OF INDEXED COST OF ACQUISITION AT ` .24 79 287/- AND ALSO CLAIMED THE INCIDENTAL EXPENS ES OF ` .3 80 050/-. AO NOTED THAT SINCE ASSESSEE BECAME TH E OWNER OF PROPERTY IN FY 2004-05 HENCE INDEXED COST OF ACQUI SITION UNDER SECTION 48(III) MEANS AN AMOUNT WHICH BEARS TO THE COST OF ACQUISITION OF THE SAME PROPORTION AS COST INFLATIO N INDEX FOR THE YEAR IN WHICH THE ASSET IS TRANSFERRED BEARS TO THE COST INFLATION INDEX FOR THE YEAR IN WHICH THE ASSET WAS HELD BY H IM. AO THEREFORE CONCLUDED THAT ASSESSEE HAS HELD THE ASSET FOR THE FIRST TIME DURING F.Y 2004-05 WHEN ASSESSEE INHERITED THE PROPERTY. A CCORDINGLY AO WORKED OUT INDEXED COST BY APPLYING COST OF INFLATI ON INDEX FOR F.Y 2004-05 THE YEAR IN WHICH THE ASSET FIRST HELD BY A SSESSEE. 3. AFTER CONSIDERING ASSESSEES SUBMISSIONS THE CIT ( A) DELETED THE ADDITION STATING AS UNDER: 1.3 I HAVE CAREFULLY CONSIDERED THE FACTS FINDING S OF AO AND SUBMISSIONS OF LEARNED AR. I FIND THAT PROPERTY IN QUESTION WAS ACQUIRED BY THE APPELLANT DURING F.Y 2 004- 05 BY WAY OF INHERITANCE ON DEATH OF HER MOTHER WH O ACQUIRED THE SAME BEFORE 1981. SINCE THE ACQUISITIO N OF THE PROPERTY IN QUESTION IS BY WAY OF INHERITANCE; HENCE COST OF ACQUISITION OF PROPERTY TO PRESENT OWNER WO ULD BE COST OF ACQUISITION TO THE PREVIOUS OWNER OF THE PR OPERTY. SINCE THE PREVIOUS OWNER HAS FIRST ACQUIRED THE SAI D PROPERTY IN THE YEAR 1967 THEREFORE COST OF ACQUI SITION OF PROPERTY WOULD ALSO BE CONSIDERED AS ON 01.04.19 81 AS PROVIDED IN SECTION 49(1)(III)(A) READ WITH EXPL ANATION TO SAID SECTION WHICH READS AS UNDER: COST WITH REFERENCE TO CERTAIN MODES OF ACQUISITION SECTION 49(1) WHERE THE CAPITAL ASSET BECAME PROPERTY OF ASSESSEE- (I).. ITA NO.6484 OF 2010 MS SWAPNA PHOTOGRAPHER MUMBAI E BENCH PAGE 3 OF 4 (II) W ILL (III) (A)BY SUCCESSION INHERITANCE OR DEVOLUTION OR (B) (C) (D). (E).. (IV). THE COST OF ACQUISITION OF THE ASSET SHALL BE DEEMED TO BE THE COST FOR WHICH THE PREVIOUS OWNER OF THE PROPERTY ACQUIRED IT AS INCREASED BY THE COST OF ANY IMPROVEMENT OF THE ASSETS INCURRED OR BORNE BY THE PREVIOUS OWNER OR ASSESSEE AS THE CASE MAY BE. (EXPLANATION- IN THIS (SUB-SECTION) THE EXPRESSION PREVIOUS OWNER OF THE PROPERTY IN RELATION TO ANY CAPITAL ASSET OWNED BY AN ASSESSEE MEANS THE LAST PREVIOUS OWNER OF THE CAPITAL ASSET WHO ACQUIRED IT BY A MODE OF ACQUISITION OTHER THAN THAT REFERRED TO IN CLAUSE(I) OR CLAUSE(II) OR CLAUSE(III) (OR CL AUSE (IV) OF THIS (SUB-SECTION). THUS IN VIEW OF ABOVE THE COST OF ACQUISITION OF F LAT WOULD BE DEEMED TO THE COST OF FLAT TO THE PREVIOUS OWNER. THE APPELLANT HAS CLAIMED THE INDEX COST OF ACQUISITION AT ` .24 79 827/- TO THE PREVIOUS OWNER AS ON 01-04-1981. 1.3.1 RELIANCE IS PLACED ON BOARD CIRCULAR NO.636 D ATED 31.08.1992 WHICH SAYS THAT THE INDEXATION IS INTROD UCED SO AS TO LINK THE ADJUSTMENT OF COUNTERING THE INFL ATION WITH THE PERIOD OF HOLDING. THEREFORE CASES COVERE D BY SECTION 49(1)(II) WOULD BE CONSIDERED AS THEY HAVE HELD BY PREVIOUS OWNER OF THE PROPERTY. 1.3.2 RELIANCE IS PLACED ON THE DECISION OF SPECIAL BENCH IN CASE OF DCIT VS. MANJULA J. SHAH (2009) (30 DTR (MUM) (SB) (TRIB) 601) (DT. 16.10.09) IT WAS HELD T HAT THE INDEXED COST OF CAPITAL ASSET ACQUIRED UNDER GIFT H AS TO BE COMPUTED WITH REFERENCE TO THE YEAR IN WHICH THE PREVIOUS OWNER FIRST HELD THE ASSET. SUCH VIEW WERE ALSO HELD IN THE CASE OF PUSHPA SOFAT VS. INCOME TAX OFF ICER (81 ITD 1) SMT. MINA DEOGUN V. INCOME TAX OFFICER (19SOT 183 KOL) (DTD 3.8.07) AND DCIT VS. SMT. MEER A KHERA MUMBAI (2 SOT 902) (MUM) (DTD. 5.8.03). THUS THE FACTS OF PRESENT THESE ARE SQUARELY APPLICABLE TO APPELLANTS CASE HENCE RESPECTFULLY FOLLOWING TRI BUNAL DECISION AO IS DIRECTED TO ADOPT COST OF INDEXATIO N AS ON ITA NO.6484 OF 2010 MS SWAPNA PHOTOGRAPHER MUMBAI E BENCH PAGE 4 OF 4 01.04.1981 AS THE PREVIOUS OWNER HAS HELD THE PROPE RTY PRIOR TO 01.04.1981. THEREFORE AO IS DIRECTED TO C ONSIDER INDEXED COST OF ACQUISITION AT ` .24 79 287/- AS ON 1-4- 1981 AS COMPUTED BY THE APPELLANT AND RE-COMPUTE TH E CAPITAL GAINS ACCORDINGLY. THE GROUNDS OF APPEAL NO . 1 TO 4 ARE ALLOWED . 4. WE HAVE HEARD THE LEARNED DR. ASSESSEE IS NOT REPRE SENTED AND HENCE THE APPEAL WAS CONSIDERED EX-PARTE . 5. WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDE R OF THE CIT (A) AS HE HAS NOT ONLY ANALYZED THE ISSUE WITH REFE RENCE TO THE PROVISIONS OF THE ACT BUT ALSO LEGAL PRINCIPLES ON THIS ISSUE. THE DECISION OF THE HON'BLE SPECIAL BENCH IN THE CASE O F DCIT VS. MANJULA J. SHAH (2009) (30 DTR (MUM) (SB) (TRIB) 60 1) (DT. 16.10.09 ) WAS ALSO UPHELD BY THE HON'BLE BOMBAY HIGH COURT (6 8 DTR 269). ACCORDINGLY EVEN ON JUDICIAL PRINCIPLES THE ORDER OF THE CIT (A) IS CORRECT ACCORDING TO THE LAW AND THE PRO VISIONS. THEREFORE WE SEE NO MERIT IN THE REVENUE APPEAL HENCE DISMIS SED. 6. IN THE RESULT APPEAL FILED BY THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JULY 2012. SD/- SD/- (B.R. MITTAL) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED 30 TH JULY 2012. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR E BENCH ITAT MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES MUMBAI